February 2024 Monthly Newsletter

Greetings everyone. Welcome to the February 2024 edition of our monthly newsletter. We hope you enjoy the three data points below that we found worthy of sharing.

Build-To-Rent Market Outlook

"In the face of strong renter demand with rents that are typically well above those for apartments, many developers are preparing to serve an increasing level of “pent-up” demand over the next three years. This refers to demand that exceeds the forecasted level of production and completions. Many of our well-capitalized clients tell us that is their strategy for 2024: get projects planned and in the development pipeline while many of their would-be competitors are struggling to line up debt and equity to move forward. Our firm is forecasting that BTR housing starts will be down by 30% or more this year." - Brad Hunter

Built-To-Rent Development Forecast: New Supply To Fall Short Of Demand This Year (forbes.com)

SUB-MARKET HIGHLIGHT OF THE MONTH

Alliance, TX

The 27,000-acre master-planned development by Ross Perot Jr. centered around the Alliance Industrial Airport in North Fort Worth has been one of the most successful public-private partnerships in the country and made the surrounding submarket a hotspot for job growth and an economic powerhouse. Alliance Texas is home to 574 companies that have generated more than 66,000 direct jobs and around 58 million square feet of developed space. The development powered nearly $10 billion in impact last year alone, and $120 billion in the last 35 years per Insight Research Corporation. Facebook’s $2 billion data center, Charles Schwab’s 70-acre Headquarters, Amazon Air’s regional hub, FedEx’s southwest regional hub, and UPS ground sorting centers are just a few of the high-profile names that call Alliance Texas home. Shopping and entertainment are also booming in the 900-acre Alliance Town Center, with 41 retail shops, 40+ dining options, and 30 acres of parks and trails. There are no signs of slowdown in the region, with recent announcements of planned 60-acre mixed use development anchored by Dallas Stars sports center along the State Hwy 114 expansion. Recently, Samsung announced the headquarters of North American HVAC will be expanding into 360,000 square feet, QTS filed plans to build a $220 million data center, and McCaster-Carr announced a $360 million regional headquarters and distribution center in Alliance. Within 5 miles of the Alliance airport, the average household income is $130k, and the average annual population growth has been 3% since 2010. Average annual rent growth within the submarket over the past 10 years is 3.9% for traditional multifamily properties vs. 4.85% for SFR properties. Over the past 5 years, average annual rent growth has been 3.95% for multifamily properties vs. 5.68% for SFR properties.

BFR DEVELOPMENT HIGHLIGHT OF THE MONTH

Collection Champions Circle

Since the airport was completed in 1990, there have been nearly 15,000 homes and 3,000 apartments built. Most recently in the build-to-rent space, a 276-unit duplex style project: Collection Champions Circle was completed just south of Texas Motor Speedway. Because build-to-rent projects typically have density of 10-12 units/acre, it is essential to have a variety of exterior facades, elevations, and unit styles to avoid monotony and make the community feel like a traditional single-family neighborhood. We like the varied color palette to create textural richness across facades and the combination of cultural context blended with modern finishes in the common areas. The project below has a density of 12 units/acre and began leasing early 2024, with blended rental rates north of $2/foot for 1, 2, and 3 bedrooms.